Bombardier Under Fire Over Executive Bonuses After Decades of Corporate Welfare
Canadian plane and train maker Bombardier has been slammed for its "sense of entitlement" after awarding $32.6 million to senior executives in 2016. The payout comes at a time of workforce cuts and government aid.
"At the very least, it demonstrates a rather incredible sense of entitlement, doesn't it?" Baskin Wealth Management President David Baskin told Canadian broadcaster CBC.
"Here's a company that basically went begging to the province and the federal government for money, saying that if you don't give us all this money, we're going to lay off all these workers," he said.
The Montreal-based aerospace company started a five-year turnaround plan in 2015 to regain its financial footing. Since then the company has cut 14,500 jobs worldwide as part of the organizational change.
According to CBC, the total compensation for Bombardier’s top five executives and board chairman Pierre Beaudoin increased 50 percent from their 2015 bonus of $21.9 million.
CEO Alain Bellemare received $9.5 million, including $5.2 million in share and option-based awards and a $1 million salary. His annual bonus almost doubled to $2.36 million.
Beaudoin's compensation increased to $5.25 million from $3.85 million a year earlier.
The company attributed the higher pay to a number of factors, including achieving profit and cash flow targets, securing CSeries orders and completing the first flight of the new Global 7000 business jet.
Bombardier spokesman Simon Letendre said a significant portion of the compensation was not guaranteed.
"For instance, 85 percent of the compensation of the president and CEO is at risk, and 28 percent is comprised of stock options whose value depends on the appreciation of Bombardier stock, something that would, of course, benefit all shareholders,'' Letendre told CBC.
Last year, Bombardier received a $1 billion investment for the CSeries program from the Quebec government in exchange for a 49.5 percent stake. The company also sold a 30 percent stake in its railway division to pension fund manager Caisse de Depot for $1.5 billion.
Bombardier cut its loss to $981 million last year, down from $5.34 billion in 2015 despite lower revenues.
On Thursday, Canada’s Prime Minister Justin Trudeau stood by the government's decision to put money into the company.
"Investing in Bombardier is a way of ensuring good long-term jobs in the aerospace industry right across the country," he said.
Bombardier has been supported by taxpayers since the 60's and has only paid off around half of its 'loans' to date. Many Canadians view the company as uncompetetive, unable to meet delivery times and unprofitable.